Chesapeake Accused of Hiding Costs of Executives’ Jet Use

May 9 (Bloomberg) -- A Chesapeake Energy Corp. shareholder
accused the company of underreporting the use of company
corporate jets by executives and directors for personal travel.

The shareholder, Gilberta Norris, filed a so-called
derivative lawsuit yesterday in Oklahoma state court on behalf
of the natural-gas supplier against its board, including
Chairman and Chief Executive Officer Aubrey McClendon. Norris
accuses the directors of breach of fiduciary duty by misleading
shareholders about the true cost of personal use of company
aircraft.

In the redacted, public copy of her complaint, Norris said
she had asked to see Chesapeake’s books and records, which
revealed “the true extent and the true cost of personal travel
on the company’s aircraft.”

“Given that personal use comprised such a high proportion
of total use, the board never had any basis for withholding from
shareholders the large fixed costs of the aircraft,” Norris
said. If the fixed costs had been included, “the true costs of
personal use of the aircraft would have increased by close to an
estimated $10 million a year,” she said.

Michael Kehs, a spokesman for Oklahoma City-based
Chesapeake, declined to comment on the complaint.

“We haven’t seen the lawsuit but will address in the
proper forum when we receive the complaint,” Kehs said today in
an e-mail.

Shares Fall

Chesapeake shares have fallen amid concern that McClendon’s
private loans and deals conflict with his professional duties.
They dropped as much as 53 cents, or 3.1 percent, to $16.40
today in New York Stock Exchange composite trading.

The directors said May 1 that they will strip McClendon of
the chairman’s post and are conducting an internal review of his
personal transactions. The Securities and Exchange Commission
opened an informal inquiry last week, the company said.

In a derivative suit, any recovery would be returned to
Chesapeake’s coffers rather than awarded to individual
shareholders.

The case is Norris v. Aubrey McClendon, CJ-2012-2751,
District Court of Oklahoma County.